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Professionals Like Doctors, CA’s, Lawyers Brought Under Government’s Credit Guarantee Scheme for MSME’s

By Bakul      Aug 04, 2020      0 Comments      2,668 Views
Doctors CA Lawyers MSME

In May 2020, a scheme was announced by the Indian Government as a part of the Government’s Aatmanirbhar package to provide financial support to Micro, Small and Medium Enterprises (MSME).

The Government gives full loan guarantee to an incremental loan given to borrowers under this scheme. On Saturday 1st August,2020 the Government of India expanded the scope of its MSME’s COVID-19 loan scheme by including professionals like doctors, lawyers, and CA’s. More businesses and individuals were added into the scheme, without increasing the size of the pie.

The Finance Minister Nirmala Sitharaman said that ‘As of July 29 the scheme’s ambit has been increased to include individual loans for working capital purposes. Rs 1.4 lakh crore had been sanctioned under the scheme while Rs 87,227/- crore worth of loans disbursed’

The annual turnover ceiling has been raised to Rs. 250 crores from Rs 100 crore in line with the new definition of MSMEs. The maximum limit of loan is also increased to Rs.10 crore from Rs.5 crore under this scheme also including the individual loans under this.

The government will do everything to help a business stand up on their own feet said the Finance Minister on Saturday. It is also expected that RBI will also bring up a one-time restructuring of loans for stressed sectors like tourism and hospitality in its monetary policy review due next week.

Upon asking that GST Council will be allowed to borrow funds for distribution to states to fight the pandemic, Sitharaman said the opinion of the attorney general has been sought for this purpose and it will be placed before the next meeting of the council.

The government has decided to relax the eligibility criteria for tapping the Rs. 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) to cover professionals and enable a much wider pool of businesses to benefit from it, finance minister Nirmala Sitharaman said on Saturday.

The government has earmarked a corpus of Rs 41,600/- crore over the current and the next three financial years to implement the ECLGS. Loans under the scheme will have a 4-year tenor with a moratorium of 12 months on the repayment of the principal amount.

The interest rate will be capped at 9.25% a year for banks and financial institutions and 14% for non-financial banking companies. Last week, the Delhi High Court had dismissed a PIL seeking the inclusion of advocates under the MSME scheme.

 

 



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